An Increase in the Effective Tax Rate on Capital Would

question 46

Multiple Choice

An increase in the effective tax rate on capital would cause the IS curve to

• A)shift up and to the right.
• B)shift down and to the left.
• C)remain unchanged.
• D)remain unchanged if taxes are fully deductible from income; otherwise, shift up and to the right.

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Definitions:

Non-Controlling Interest

A portion of the equity in a subsidiary not owned by the parent company, typically shown separately in the consolidated financial statements.

Net Income

The total earnings of a company after deducting all expenses and taxes from revenue, indicating the company's profit.

Intercompany Profit

Profits that arise from transactions between companies under common control, which may need to be eliminated in consolidated financial statements.

Unrealized Profits

Gains on transactions that have occurred but have not yet been realized through the receipt or payment of cash.